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Disney Just Confirmed the Biggest Reason It Acquired Fox

Turns out it was all about streaming content.

When Disney(NYSE:DIS) finally unveiled the details of its upcoming Disney+ streaming service last Thursday, shares of the entertainment conglomerate soared 11.5% Friday in response, marking its biggest single-day pop in a decade.

After all, at just $6.99 per month or $69.99 per year -- or just above half the $13 per month Netflix(NASDAQ:NFLX) is now charging for its most popular plan -- it's obvious the House of Mouse wants consumers to view Disney+ as a relative bargain to other video-streaming services when it launches this November. What's more, the company predicted Disney+ should be able to achieve profitability by 2024, amassing as many as 60 million to 90 million subscribers by the end of that year.

Make no mistake, with much of Fox's content to be offered alongside Disney's existing portfolio, it's no coincidence that mammoth $71 billion deal only just closed a few weeks ago. In fact, according to Disney management, the Fox purchase wouldn't have happened had it not been integral to Disney's streaming vision.

IMAGE SOURCE: DISNEY.

Disney's $71 billion bet on streaming

In an interview with CNBC last week, Disney CEO Bob Iger stated:

We would have have done [the Fox] transaction had we not decided to go in this direction. Because if we hadn't, we would have been looking at that business through a traditional lens: "Oh, we're buying TV channels. We're buying more movie-making capability," etc. But by the time the acquisition opportunity came up, and we knew we were going in this [streaming] space, we evaluated what we were buying through this new lens of "Wow, what would National Geographic mean to us?"

Of course, it certainly won't hurt that Disney can now supplement its studio, parks and resorts, media networks, and consumer products segments with Fox's portfolio of film and TV franchises, notably including Deadpool, Avatar, X-Men, Fantastic Four, This Is Us, Modern Family, The Simpsons, and (as Iger noted) National Geographic. Disney also picked up FX Networks and doubled its ownership in Hulu to a controlling 60% stake through the deal.

But coupled with Disney's already enviable stable of content -- from its namesake studios and TV channels to Marvel, Lucasfilm, Pixar, and ABC -- there's no denying that the massive number of family friendly titles within Fox's assets bolsters the value proposition of Disney+ in a way that Disney simply couldn't achieve alone. If that wasn't enough, Disney also revealed last week it plans to invest $1 billion toward producing original content for Disney+ by the end of next year, including series revolving around the storylines of specific Star Wars, Marvel, and legacy Disney characters.

In the end, however, it's clear that Disney believes its streaming plans would not have come to fruition without the help of Fox. And if all goes as planned, the combination could positively transform the streaming media landscape -- and the value of Disney shareholders' portfolios -- as we know it.

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As a technology and consumer goods specialist for the Fool, Steve looks for responsible businesses that positively shape our lives. Then he invests accordingly. Enjoy his work? Connect with him on Twitter & Facebook so you don't miss a thing.